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Real estate around the state.

Perhaps the biggest Indiana real-estate story in recent years currently is taking shape in the Indiana court system.

As more than 1,000 local township assessors go about their periodic work of reassessing every piece of real estate in Indiana, the Indiana Civil Liberties Union has gone to court to challenge the way those assessors do their jobs. The current process, says the ICLU, is illegal in that it allegedly violates the Indiana Constitution's call for a "uniform" property assessment system.

In Indiana, township assessors use a hefty binder full of information to arrive at property values. They establish a replacement cost, then deduct part of that cost for depreciation. Factors such as the neighborhood and the quality of construction enter into the equation, but the actual market value does not. Because of that, two houses in the same part of town that sold on the same day for the same price might have significantly different tax bills.

"All of us who have studied the system for years have been offended by it," says Sheila Suess Kennedy, executive director of the ICLU. Among the organizations in support of the challenge is the conservative Indiana Policy Review Foundation. The think tank's president, Mike Pence, says the issue cuts across ideological lines.

It's anyone's guess how long it will take for the dispute to work its way through the court system. And if the challenge is successful, it's impossible to predict what kind of assessment system will replace the current one--all that is certain is that some people's bills would go up and others' would go down. In the meantime, the assessors will continue their months of toiling to tally assessments that eventually could be overruled.

NORTHERN INDIANA

The property at the corner of Wayne and Calhoun streets in downtown Fort Wayne has had its ups and downs.

First, it was to be the INB Center. The five-story, 75,000-square-foot structure with an attached parking garage was to house, among others, INB National Bank and the offices of Murphy & Associates, the building's developer. Then, when NBD Corp. took over the parent of INB, the picture became cloudy--NBD already had acquired Fort Wayne's Summit Bank, which had its own building. There went the anchor tenant.

Now comes word of the silver lining for Murphy & Associates. The project, now called City Center, will have a 130,000-square-foot office building with eight floors, three more than before. Instead of INB or NBD as the primary tenant, Norwest Bank's Indiana and Ohio regional headquarters will take up the first four levels, with banking lobbies and drive-through lanes on the first floor. The Fort Wayne office of the law firm Baker & Daniels will be on the sixth, seventh and eighth floors, and the fifth floor will house Murphy & Associates and the architecture/engineering firm SchenkelShultz. The center, which will have a 350-car attached parking garage, is now 100 percent preleased.

The building is scheduled for completion in 1995, according to Jim Lohman of Murphy & Associates. The parking garage will open even sooner, he adds. "That parking garage will be a welcome addition downtown. It's very much needed there."

As for other real-estate happenings in the Fort Wayne area, Lohman says the air is full of optimism. "The Fort Wayne economy is steadily coming back. Basically, a lot of positive things are going on." In particular, he points to the retail sector as a promising area. Construction has begun on one of the new Meijer grocery/discount stores that were announced some time ago, and Lowe's is moving ahead with plans for home-supply stores in the area.

Also, Indianapolis-based appliance and electronics retailer h.h. Gregg has announced plans to enter the Fort Wayne market. It will convert a 44,000-square-foot building that once was a Tepe catalog showroom. The store will be Gregg's 15th, and the chain's biggest.

The Edison Lakes development in Mishawaka continues to be a focal point of significant development. Currently under way is a 27,000-square-foot medical facility for a kidney-dialysis group, says Chris Davey, president of Cressy & Everett Commercial, developer of Edison Lakes. Other new projects of note include an 11,000-square-foot build-to-suit for Indiana Insurance, a 10,000-square-foot building for St. Joseph Title and quarters for Sentry Insurance. Additional projects will be announced soon, Davey promises.

In retail, a 300,000-square-foot center will be going up in the Edison Lakes area, and the Cinemark movie-theater chain from Dallas plans to construct a 10-screen discount movie house nearby.

Across town, there are plans to lease the old 60,000-square-foot AM General facility on Chippewa to Olinger Distributing of Indianapolis. And at the Airport 2010 project in South Bend, a 12,000-square-foot build-to-suit for an overnight-delivery service is in the works.

As for the northwest corner of the state, "the last several months have seen a steady volume of business, nothing earth-shattering, no major ups or downs," reports Stan Wolucka, manager of the commercial group at Price Realtors in Highland.

"Office space probably has the largest amount of vacancy in the area, followed by retail, followed by warehouse and manufacturing space," he says. "Projects are now being filled up, and that's going to spur some future development." Small warehouse space, he adds, is in somewhat short supply, though there are some larger facilities available that have in some cases been divided for use by smaller tenants.

There are a number of prime retail spaces available in a couple of area malls, and there has been decent activity among lookers. But those shopping for retail space have had the luxury of being choosy about the price, and landlords have responded by keeping rental rates down and offering some minor build-outs.

There has been discussion of a major retail center totaling about 600,000 square feet along U.S. 41 in Highland, though the project has caused concerns among some in the local business community who worry that it'll have an adverse effect on existing businesses.

Meanwhile in the Gary area, a flurry of activity may be heralding the beginning of riverboat gambling in Indiana. The state Legislature legalized riverboat gambling this summer, and city officials have been busy making preparations in hopes of getting a boat in the water before neighboring Chicago can christen competing vessels.

Gary's chances of moving quickly onto the gambling map are boosted by the fact that city residents already have approved the idea in a referendum, which is one of the requirements set forth by the new gambling law. A casino company has yet to be chosen and the launch site is still undecided, but local development officials hope casino patrons will have a Gary destination within a year. And that, backers say, should have profound ramifications for the surrounding real estate, upon which could spring such ancillary developments as hotels and amusement parks.

CENTRAL INDIANA

The downtown Indianapolis office market has taken a number of hits in recent years, as major office users have moved to the suburbs. Then came a recent move in the other direction. David Goodrich, president of the commercial real-estate services division of F.C. Tucker Co., says it's noteworthy that McCaffrey & McCall has announced plans to move from the north side of Indianapolis into a downtown office affectionately known as the "zipper building" because of its distinctive exterior. The move should serve to boost the downtown's southeast sector, where the exodus to the suburbs had hit hardest.

Elsewhere downtown, Lincoln National Corp. recently acquired the 22-story 101 West Ohio building for $14 million. The 261,000-square-foot building is popular with smaller tenants--there are nearly 60 there now--a situation Lincoln National says it likes because of the stability it promises.

Construction on a new $14 million downtown headquarters for the Christian Church (Disciples of Christ) is slated to begin once the denomination can raise money it needs from donors. The church currently has headquarters on the east side of Indianapolis and wants to move 250 employees into the planned six-story building along historic Indiana Avenue. The building should be completed by 1995.

Indiana Avenue also will be the site of the headquarters of the U.S. Gymnastics Federation. The $9.5 million headquarters will be home to some 70 employees, and will sit next to a 500-car parking garage that the city of Indianapolis plans to develop. The garage and gymnastics headquarters should be completed in 1995.

Over on Pennsylvania Street, the brand-new National Bank of Indianapolis is busy planning its main branch and corporate office facility.

In another part of downtown Indianapolis, the 30-year-old Riley Towers apartment development could soon be owned and managed by Barrett & Stokely, an Indianapolis real-estate firm that manages the distinctive Pyramids at College Park development. Riley Towers, which includes two 30-story towers and a 16-floor building, had been put up for sale in January by the Federal Deposit Insurance Corp. The development has 599 apartments and a dozen commercial suites.

Three miles north of downtown, Meridian Mutual Insurance Co. is expanding its Meridian Street headquarters complex. The plan is to add 75,000 square feet to the 125,000 already there, to allow room for all of the Indianapolis operations under one roof. The project should be finished by mid-1995.

The outskirts of town are where Methodist Hospital of Indiana, the state's largest hospital, has been focusing its expansion efforts. In April it opened an outpatient center at West 38th Street and Interstate 465, and Methodist has announced plans for additional satellite facilities on the north and south sides of Indianapolis. The 70,000-square-foot south-side medical building, to be completed next year, joins a host of other new medical facilities in that part of Indianapolis. Community Hospitals Indianapolis earlier this year opened maternity and heart-catheterization units at its hospital not far from the Methodist project. And St. Francis Hospital and Health Centers currently is building a $45 million South Campus, which will house among other things an emergency room, a pediatric unit and all of St. Francis' maternity services.

The office vacancy rate downtown stood at 20.2 percent in June, down from 20.8 percent in March and 22.0 percent the previous June, according to the local office of CB Commercial. The suburban office vacancy rate was 20.1 percent, down from 20.4 percent a quarter earlier and a point and a half below the year-ago figure, CB Commercial reports.

Industrial real estate remains a bright spot in the capital city. "There continues to be a great deal of interest in the Indianapolis marketplace by out-of-state companies in need of central distribution facilities," Goodrich of F.C. Tucker says, adding that he believes the time is right for lenders to finance some speculative space of this type. Otherwise, he fears, companies may end up locating in some other Midwestern cities. Indeed, CB Commercial's tally of industrial vacancy shows only a 5.2 percent vacancy rate in Indianapolis, one of the lowest rates in the Midwest.

Among other recent industrial-space developments, Caterpillar Logistics Services is building a 336,000-square-foot warehouse in the Park 100 development. The building will be used as a parts-distribution center by Mitsubishi Caterpillar Forklift, a joint venture between Caterpillar Inc. and Mitsubishi Heavy Industries. The firm plans to use only 240,000 square feet of the building, however, and is seeking a tenant for the remaining space. The Mitsubishi Caterpillar operation will employ more than 100 people when it opens in the spring.

Also at Park 100 is the new corporate headquarters of Nina International, manufacturer and wholesaler of lipstick and nail polish. The company took a 24,000-square-foot space.

Near Indianapolis International Airport, Duke Construction Management is building a $12.7 million, 135,000-square-foot operations center for NBD Indiana. The facility will handle check processing and other administrative support functions for the state's largest bank-holding company.

In the retail sector, the biggest news continues to be the ongoing development of the Circle Centre Mall downtown. Construction is under way on the parking garages that will be under the mall, and developer Melvin Simon & Associates has been putting the final design touches on the plan.

Restaurant and other retail activity is hot in the Muncie area, reports Steve Maines, director of commercial sales for ADM Commercial Real Estate. Marsh Supermarkets, for example, has purchased 15 acres along Tillotson Avenue, though it hasn't yet disclosed exactly what it will do with the property. Also, a major but as-yet-undisclosed retailer plans a giant facility on a 19-acre tract on McGalliard Road.

Meanwhile, ground is due to be broken soon on Kenmore Professional Court along Tillotson. A local obstetrician will occupy part of the 20,000-square-foot first phase of the medical-office development, while other physicians will take the rest of the building. Another building of about the same size could go up on the site in a year or two.

The future in Muncie looks promising, Maines says. As in other Indiana cities, developers have fielded inquiries from a number of national restaurant chains. The biggest potential cloud is that, the way things are going, good locations available for construction could become hard to find.

SOUTHERN INDIANA

The west side of Bloomington continues to be a hot commercial development area, according to Tom Gallagher, a commercial agent with Owens Bryan & Reed Realtors. A Sam's Club at Indiana 37 and Indiana 45 is set to open soon, in a development adjoining a new Wal-Mart.

The Sam's Club and other recent developments along Indiana 37 may be just the beginning, Gallagher adds. New highway interchanges have made the area more driver-friendly, and the planned transformation of 37 into an Indianapolis-to-Evansville extension of Interstate 69 is sure to bring more development in years to come. The area also happens to be the part of town where governmental planners are trying to steer development, now that they've concluded the College Mall area on the east side of Bloomington is as fully developed as it ought to be.

Meanwhile, the Showers project downtown is becoming a reality. The joint venture between the city, Indiana University and CFC Inc. will transform the 225,000-square-foot former Showers Furniture factory into city offices, IU research-park facilities and other offices. Among other things, the move means the current City Building will go on the market.

North Vernon is the site where Lowe's Cos. plans a $20 million distribution center that will help it serve a growing number of home construction and decoration retail stores. The company hopes its 376-employee center will be open next year. Lowe's already has five retail stores in Indiana and has announced plans to open several more.

And in Evansville, the empty space at Washington Square Mall finally is being filled after a year. L.S. Ayres had vacated the 135,000-square-foot anchor spot, a move that squeezed a number of smaller tenants, some of which had to close as well. Now, Elder-Beerman of Dayton has announced it will take over the space and spend several million dollars renovating it. The chain has about 50 department stores, as well as more than 130 El-Bee Shoe Outlet stores and about 75 Margo's women's clothing stores.

Meanwhile, Evansville gained from Indianapolis' loss of the AMAX Coal headquarters. AMAX has a regional office in Evansville, and when the Indianapolis office shut down, as many as a third of its employees were shifted to Evansville, says Calvin Dentino, manager of the commercial real-estate division of Citizens Realty & Insurance. "That took up some vacant space in a building we were trying to fill."

Dentino says the commercial sector has seen a flurry of investor interest, now that some higher-income people have discovered the new tax benefits of putting their money in commercial real estate. "People are positioning themselves with the new tax laws."

Also, the prospect of riverboat gambling has created additional real-estate activity in Evansville. "A lot of people are trying to buy property in the downtown area and can't, because the owners are waiting to see what riverboat gambling will do."
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Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Title Annotation:evaluation of Indiana's real estate industry
Author:Kaelble, Steve
Publication:Indiana Business Magazine
Article Type:Industry Overview
Date:Sep 1, 1993
Words:2658
Previous Article:Indiana's entrepreneurs of the year.
Next Article:Agents of change.
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